Marina Glencoe v. Neue Sentimental Film

Filed 12/2/09 Marina Glencoe v. Neue Sentimental Film CA2/4

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FOUR

APPEAL from a judgment of the Superior Court of Los Angeles County, Joseph S. Biderman, Judge. Affirmed.

Westlake Law Group, Julian A. Simonis; Law Offices of Gary L. Bostwick and Gary L. Bostwick for Plaintiff and Appellant.

Squire, Sanders & Dempsey, James H. Broderick, Jr. and Adrienne R. Salerno for Defendant and Respondent.

____________________________

In this breach of contract lawsuit, plaintiff and appellant Marina Glencoe, L.P. voluntarily dismissed its action against defendant and respondent Neue Sentimental Film, A.G. with prejudice. Appellant appeals the trial courts award of costs to respondent, arguing (1) the trial court erred by awarding respondent costs despite its unity of interests with co-defendants Neue Sentimental Film USA (NSF-USA) and Neue Sentimental Film N.Y., Inc. (NSF-NY); (2) equitable principles were not and should have been applied when the trial court awarded costs; and (3) respondent cannot be both a judgment debtor and a prevailing party.

We hold that because there was not a unity of interest between respondent on the one hand and NSF-USA and NSF-NY on the other, the trial court properly awarded costs pursuant to Code of Civil Procedure section 1032.[1] Because the award of costs was statutory not discretionary, the trial court correctly decided not to weigh equities. Res judicata precludes appellant from asserting that respondent is the alter-ego of NSF-USA and NSF-NY and should be treated as a judgment debtor rather than a prevailing party. The judgment awarding costs is affirmed.

FACTUAL AND PROCEDURAL SUMMARY

NSF-USA leased a commercial property from appellant. In May 2003, appellant sued NSF-USA, NSF-NY, and respondent for breach of contract. Appellants theory was that NSF-NY and respondent owed rent as alter egos of NSF-USA. After NSF-USA and NSF-NY petitioned for bankruptcy, a bench trial proceeded only against respondent. The trial court bifurcated the trial to adjudicate the issue of liability based on alter ego first, and then determine damages. After appellant rested on the alter ego liability phase at trial, respondent moved for judgment pursuant to section 631.8. The court heard argument but did not rule on the motion that day. The following day, prior to the court issuing a ruling on the pending motion, appellant filed a voluntary dismissal of the action with prejudice.[2]

Respondent moved for costs as the prevailing party pursuant to section 1032. On appellants motion, the trial court taxed two items from respondents memorandum of costs. The trial court entered default judgment against NSF-USA and NSF-NY in the amount of $3,016,172.54, and ordered appellant to pay respondents costs in the amount of $14,697.58.[3] Appellant appeals from the judgment awarding costs.

DISCUSSION

As the facts are not in dispute, we review the trial courts statutory award of costs de novo. (Chinn v. KMR Property Management (2008) 166 Cal.App.4th 175, 186.) When a party falls within one of the four situations enumerated in the definition of a prevailing party under section 1032, subdivision (a)(4), that party is entitled to recover costs as a matter of right pursuant to section 1032, subdivision (b). (Chinn v. KMR Property Management, supra, 166 Cal.App.4th at p. 188.) In pertinent part section 1032 reads as follows:

(a) As used in this section, unless the context clearly requires otherwise:

. . . 

(4) Prevailing party includes the party with a net monetary recovery, a defendant in whose favor a dismissal is entered, a defendant where neither plaintiff nor defendant obtains any relief, and a defendant as against those plaintiffs who do not recover any relief against that defendant. . . .

(b) Except as otherwise expressly provided by statute, a prevailing party is entitled as a matter of right to recover costs in any action or proceeding.

Appellant challenges the application of the statute and argues that the trial court failed to give equitable consideration when awarding costs.

I

Appellant argues that respondents ownership of the co-defendants created a unity of interest [a]s an elementary practical matter that granted the trial court discretion to award and allocate costs which it failed to exercise. Appellant contends this requires reversal of the judgment.

The cost entitlement in section 1032 does not apply to a prevailing defendant united in interest with nonprevailing co-defendants. (Slavin v. Fink (1994) 25 Cal.App.4th 722, 726.)[4] Where one of multiple, jointly represented defendants presenting a unified defense prevails in an action, the trial court has discretion to award or deny costs to that party. (Textron Financial Corp. v. National Union Fire Ins. Co. (2004) 118 Cal.App.4th 1061, 1075.) Despite appellants citation to a unity of interest principle articulated in California and federal price discrimination cases, section 1032s application to litigation costs requires that a unity of interest between respondent and the co-defendants be understood in the context of unified defenses.[5](See, e.g., Wakefield v. Bohlin, supra, 145 Cal.App.4th 963 at p. 985 [finding unity of interest between husband and wife sued as a result of their joint sale of a home where represented by same attorney, filed joint answer and joined in the same motions and responses].)

Respondent and the co-defendants filed separate answers and were represented by separate counsel. NSF-USA and NSF-NY filed bankruptcy petitions then defaulted, and respondent litigated the merits of its defense. As there was no unity of interest with the co-defendants, respondent was properly awarded its costs as a prevailing party as a matter of right.[6]

II

Appellant argues that because its claim was equitable, the trial court was required to weigh equities in determining costs. This argument fails because section 1032, subdivision (b) explicitly entitles a prevailing defendant to costs. Costs were awarded as a matter of right and the trial court did not have discretion to weigh equities in denying otherwise recoverable costs. (See Crib Retaining Walls, Inc. v. NBS/Lowry, Inc. (1996) 47 Cal.App.4th 886, 889-891.)

III

Appellant argues that respondent is the alter-ego of NSF-USA and NSF-NY and thus a debtor to their default judgment, and so is disqualified as a prevailing party pursuant to section 1032. Appellants dismissal of its action against respondent with prejudice is treated as a judgment against it on the merits of the case for purposes of res judicata. (Alpha Mechanical, Heating & Air Conditioning, Inc. v. Travelers Casualty & Surety Co. of America (2005) 133 Cal.App.4th 1319, 1330-1333.) Appellant is barred from asserting that respondent is the alter-ego of NSF-USA and NSF-NY because that allegation formed the basis of its dismissed action.

DISPOSITION

We affirm the judgment and order. Respondent to have its costs on appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.

EPSTEIN, P. J.

We concur:

WILLHITE, J.

SUZUKAWA, J.

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[1] All unspecified statutory references are to the Code of Civil Procedure.

[2] This court heard argument on a related appeal by respondent. In that case we affirmed an order of the trial court denying respondent attorney fees under Civil Code section 1717. (Marina Glencoe, L.P. v. Neue Sentimental Film AG (2008) 168 Cal.App.4th 874.)

[3] We note that the federal bankruptcy court granted a motion for relief from automatic stay allowing this action to go forward against NSF-USA. The record does not indicate that proceedings were stayed as to NSF-NY.

[4] The [f]ormer section 1032 allowed costs as a matter of right to the defendant upon a judgment in his favor . . . [and] when there are several defendants in any action . . . not united in interest, and making separate defenses by separate answers, and plaintiff fails to recover judgment against all, the court must award costs to such of the defendants as have judgment in their favor. [Citation.] (Wakefield v. Bohlin (2006) 145 Cal.App.4th 963, 985, fn. 6, disagreement recognized in Guerrero v. Rodan Termite Control, Inc. (2008) 163 Cal.App.4th 1435, 1442-1445.) While the statutory language changed to omit the unity of interest exception, the underlying principle continues to apply. (Ibid.)

[5] Appellant cites to Slavin v. Fink, supra, 25 Cal.App.4th at page 726, finding that In those instances in which several defendants are united in interest and/or join in making the same defenses in the same answer, section 1032s prevailing defendant definition does not apply. (Underscoring added.) We do not agree with appellant that Slavins use of the disjunctive means section 1032s unity of interest exception is separate from how parties present their defense, particularly because the parties in Slavin shared the same counsel. (Ibid.)

[6] Because we find there was not a unity of interest, we do not address appellants contention that its default judgment renders it a prevailing party as against respondent on a net basis.